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June 14, 2023

The Big Steal: Part II

Wage theft is not an exciting story of good vs evil. It's a policy and practical failure at multiple levels of society that we'll all have to work together to fix. So how do we start?

Words: Fred Siggins
Illustrations: Tim Meakins

This is the second article in our two-part series on wage theft and the complexity of the award wages system in Australia. You can read part one here.

The subject of wage underpayment is often couched in terms of villainous businesses, lazy and over-entitled workers, declining unions and an uncaring government. This type of emotive language might get the blood up, but Disneyesque stereotypes obscure the complexities of the problem, and preclude conversations about real solutions. Wage theft is not an exciting story of good vs evil. It’s a policy and practical failure at multiple levels of society that we’ll all have to work together to fix. So how do we start?

"You're exposing yourself to liability and public shaming"

Ah, the internet. What a gloriously easy place to light the torches and break out the pitchforks. The highly publicised cases of wage theft in the hospitality industry in recent years have provided much fuel for the cancel machine, none more so than that of George Calombaris and his collapsed food empire. But did he really deserve it? 

Calombaris complained about the expense of award wage rates back in 2012, but his real trouble began when his Made Establishment group self-reported the underpayment of wages. In the long term, Made Establishment ultimately paid back all the money owed plus a $200,000 “contrition payment”. Calombaris also lost his TV gig and his restaurant empire and sold his Toorak mansion. Given what he went through, it’s easy to imagine other operators who discover underpayment in their own books taking one look at the takedown and shoving the bad books under the rug, loath to become the next public sacrifice to the gods of righteous indignation. 

None of this is to suggest that Calombaris deserves our sympathy. Complaints were made to Fair Work by Made Establishment staff well before the self-reporting occurred, and the investigation ultimately found that the problem was millions of dollars worse than the group’s own estimates. What’s more, Calombaris, who maintained that the underpayment was inadvertent and due to incorrect processes in payroll and human resources, will probably be fine if his recent TV deals and new restaurant are any indication. 

The saga and others like it have also helped to push the conversation into the light where it belongs and probably helped get Victoria’s new laws that criminalise wage theft across the line. But the point is, what incentive do businesses have to self-report underpayments? Shouldn’t people who fess up and pay up be given some leeway in the court of public opinion in the hopes that others will do the same?

"Being paid a fair wage for a fair day's work is not a privilege but a fundamental right for every worker. This is not an opinion; it's a fact under Australian law."

These questions were put to the Fair Work Ombudsman (FWO), whose spokesperson had this to say: “Self-reporting, cooperation and remediation justify the FWO’s use of non-punitive tools to resolve the matter. It’s best for a business to report an underpayment to the FWO as soon as possible, particularly when the underpayment is extensive. We provide guidance on when (and when not) to self-report in our Compliance and Enforcement Policy.”

Given the ongoing extent of the problem, it’s hard to see how Fair Work’s encouragement for businesses to self-report is working, especially when speaking with operators. Many operators contacted for this article declined to speak on the record for fear they would be seen as whingeing or that historical mistakes could come back to bite them. And maybe that’s fair. But with a problem so big, an open conversation might be the best way to effect real change. 

While it might be cathartic to play pile-on-the-celebrity-chef, the biggest culprits are larger corporate actors. FWO points to big businesses as a major contributor to wage underpayment. “In recent years there has been a clear increase in underpayments identified among large corporates,” the FWO spokesperson said. “Our experience continues to be that large-scale corporate non-compliance is often driven by ineffective governance, complacency, a lack of investment in payroll systems, expertise and auditing, and by the adoption of high-risk workplace relations strategies.” Investigating large corporate entities remains a priority for the regulator in 2023. And when the big kids don’t play fair, it makes it even harder for the little ones to compete.

So, is there a point to burning effigies when the real monsters lurk all around us? 

I asked Ben Schneiders, the journalist and author of Hard Labour: Wage theft in the age of inequality, about the public shaming of Calombaris and if it was a disincentive for others to come forward. “Hospitality is really personalised,” Schneiders says. “There was clearly an over-the-top reaction because of his celebrity. But what I’ve often found is that people who say they’ve self-reported have had credible complaints from one or a number of staff and have felt the need to look into it for risk reasons. No business wants to look at this stuff because you’re exposing yourself to liability and public shaming.”

Perhaps Schneiders sums it up best in saying, “Obviously it’s better if people do self-report and then don’t get smashed for it publicly in a disproportionate way, but it doesn’t feel like the main issue” compared to billions in unpaid wages. In other words, we shouldn’t get distracted by the sideshow.

"In fact, it's only the minimum"

Tracy Addis-Hoskin, Head of Talent & Culture for Speakeasy group, cares deeply about doing right by her staff, and hopes she has built a relationship of mutual trust with them. But, she says, when they call with questions about wages and entitlements, they’re often expecting a fight. 

Most commonly, Addis-Hoskin says, staff get confused about what they’re entitled to. “Your award should always be listed in your letter of offer, your contract and on your payslip, so make sure you check that,” she explains. Not getting any of this paperwork is a huge red flag, and as the power dynamic is weighted towards workers in the current labour market, now’s the time to demand proper documentation up front, and be willing to walk away if it's not forthcoming. 

A common trend Addis-Hoskin has noticed – and echoed by other managers and owners I spoke to – is staff moving into supervisory roles but not wanting to go onto full-time contracts because of the lower pay rates compared to casuals. “They’re actually getting paid just as much, if not better, when you take into consideration the sick pay and holiday pay,” she says. 

Historically, much of the exploitation of hospitality workers has happened around salaried managers who are expected to work long hours without extra pay, so it’s no wonder employees are particularly wary of full-time contracts. “I get it,” says Addis-Hoskin. “I was paid $55,000 per year as a restaurant manager, working 80-hour weeks with no overtime pay. Broken down by hours actually worked, the dishies were making more than me. People of my generation are touchy because we were dicked around so much, and the younger staff hear that, so they’re expecting to be exploited.”

Like many people managing payroll and other HR tasks in small to medium hospitality businesses, Addis-Hoskin does not have a degree in accounting or human resources (though she does hold a Cert IV in HR). “I’m career hospo,” she says, “and I’ve chosen this path because it’s something I love.” Without the resources of a large corporate HR department, Addis-Hoskin relies on a slew of resources to help her navigate the system. “I use a combination of Fair Work resources, the Hotels and Catering Association resources and my own research so I can make the most educated call,” she says. “There are lots of HR-focused businesses that put on free webinars. I go to all of them. And often these businesses will offer free services to check over your policies and procedures, which is a great way to find problems so you can fix them.” 

“Pat” is a single-venue operator who requested anonymity in order to speak freely about this contentious topic. “It pisses me off when I see job ads saying ‘we pay award rates!’ like it’s a big deal,” he says. “In fact, it’s only the minimum.” Pat believes that most hospitality businesses are non-compliant at least some of the time, but that treating your workers well and giving them a voice means you don’t have to be perfect. “The most important way to avoid trouble is to treat your staff with respect,” he says. “The award is designed to protect the vulnerable, so if your team feels empowered they won't need it.” 

Few people would argue with the idea that respecting your workers is smart, but Pat’s advice opens an interesting window on an environment where being compliant with wage law is far from a given.

"At a rate of $11 per employee, it's a lot cheaper than copping a fine"

We use exterminators for pest control, sparkies for wiring and alarm companies for security, all calculated as part of the cost of doing business, so why do so many venues put themselves at risk by going it alone on bookkeeping? Time after time in conversations with business owners, HR and accounting professionals for this article, I encountered the same advice: outsource your payroll (or at least employ technology to make it easier).

Katie Bryan is the founder and CEO of Propeller Advisory, an award-winning, Melbourne-based accounting firm that helps dozens of small businesses with bookkeeping and payroll. “We provide a range of payroll services including periodic processing, single-touch payroll lodgement, payment of superannuation and, most importantly, advice regarding the best tools that clients can use to ensure they stay compliant with their workplace obligations,” she says. 

At a rate of just $11 per employee per payslip, Propeller’s services are a lot cheaper than copping a fine from FWO. Bryan is also a big fan of technology. “I recommend using apps like Deputy and Tanda, or a service such as Employment Hero or Happy HR. There are lots of options on the Xero app store. HR advisers are really wonderful also, and should be thought of as an investment in the business rather than a cost.”

"Lots of moving parts and people"

From the government point of view, at least on paper, things are moving. The Senate Economics Committee’s conclusions are aligned in many ways with the recommendations made by the Migrant Workers Taskforce Report and the Australian Council of Trade Unions and the conclusions drawn by Ben Schneiders in his book. The Senate committee’s final report into unlawful wage underpayment, issued last year, makes a number of policy recommendations, including criminalising wage theft in Australia, increasing civil penalties for wage theft, and making it an offence to advertise a rate of pay less than the federal minimum. (You can see the full list of recommendations here.)

We asked the Department of Employment and Workplace Relations how the implementation of the recommendations was going. Their spokesperson responded: “A number of the Government’s election commitments align with the recommendations of this inquiry. DEWR is currently consulting with a range of stakeholders on reforms including to increase civil penalties for wage underpayment and to introduce a criminal offence for wage theft. Legislation to implement Workplace Relations reforms is expected to be introduced in the second half of 2023.” 

In the government’s official response to the Senate report published in April they have accepted the vast majority of the recommendations, at least in principle. Individuals and business associations can contact their federal members and let them know that they support the full implementation of all of the recommendations as a matter of urgent priority. 

But as the DEWR spokesperson told me, “It’s a big topic for the Australian Government to deliver on, with lots of moving parts and people.” And as mentioned in the Senate report, “The present system does not lend itself to resolving wage theft where it occurs and is detected.” Only time, and sustained community pressure, will tell if the slow-moving wheels of Australian government bureaucracy will see the situation improve.

"We cannot protect ourselves from wage theft alone"

As mentioned in Schnieder’s book, declining union membership is a contributing factor to wage theft in Australia, especially in hospitality where union membership is well below the national average of 12.5%. The United Workers Union represents hospitality workers in Australia. Their Director, Godfrey Moase, says part of the reason wage theft is so bad here is “our labour relations system, that atomises workers and places real barriers in their way to enforcing minimum standards.” In other words, divided we fall. 

In terms of what should be done to fix the problem, Moase says that workers should have better access to help in recovering wages. “It needs to be a lot simpler,” he says. “Workers should be able to access the Fair Work Commission to enforce minimum workplace standards as opposed to having to go to the court system,” which is costly, time-consuming and complex. But, he says, “United Workers Union members have made big strides in addressing historic wage theft, and in setting new minimum standards of pay and conditions in a range of areas and at major employers like Mantle Hospitality Group in Queensland.” If only more people were members. 

In his book The Future of Unions and Worker Representation: The Digital Picket Line, Anthony Forsyth, Distinguished Professor in the Graduate School of Business and Law at RMIT, argues that the union movement’s main goal to recover relevance should be pursued by attracting young people.

“They should do this by completely revisiting what a union looks like, to become more attractive to young workers,” he says on his website. “The United Workers Union tried this through its Hospo Voice project over five years until it was wrapped up last year. This was the concept of a digital union, which had some success in contesting wage theft and sexual harassment in hospitality workplaces, but couldn’t make the transition to becoming an ongoing union vehicle for improving workers’ wages and conditions.”

At the time Hospo Voice was going, many people in hospitality I spoke with seemed to be turned off by their take-no-prisoners, comrades-in-arms approach. Good intentions may abound, but today’s hospo workforce, made up largely of young people and migrants, may not be as receptive to the language of class struggle as the workers of last century. As Forsyth asks, “Are there enough young, diverse, energetic officials and activists that potential recruits can relate to? Technology is a necessary tool for unions… but not an end in itself. It has to be combined with the hard work of traditional organising.”

We asked UWU Director Moase what was happening in the hospitality space since Hospo Voice wrapped up. “Right now, the union is focusing on building and supporting a new generation of workplace leaders in hospitality so we can be better organised around driving up award standards,” he says. “Hospitality work is work, and should have the same protections for workers as any other industry.”

And his advice for hospitality workers? “Most importantly, get to know your workmates and build trust. We cannot protect ourselves from wage theft alone, but we can protect each other by working together.”

"An inherently risky investment"

Owning a business is tough, especially in an industry like hospitality that’s particularly vulnerable to trends, inflation, fluctuations in property value, demographic changes, media attention (or lack thereof), labour shortages and supply-side shocks. And small business remains Australia’s largest source of employment and a critical part of our social and cultural landscape. Three cheers for the Aussie battler! 

Small hospitality businesses deserve support from the government, industry associations and the community, including from unions and other workers’ groups where appropriate. And anything that can help to facilitate their compliance without creating an undue burden should be undertaken as a matter of priority on every level, as all of the above will help to alleviate epidemic wage theft. Small venues must also fight to hold corporate hospitality accountable and level the playing field. 

But it’s also important for all business owners to acknowledge and accept that the risks they undertake are entered into willingly. Mitigating those risks, whether that means taking out fire insurance or hiring an HR consultant to manage the payroll, is their responsibility, and theirs alone. Owning a business is an inherently risky investment, which is why owners get to keep the profits. It’s a privilege of the financially secure and/or risk-tolerant, not a right.

Like everyone else in Australia, all business owners have the option to sell up and go get a job working for someone else, and to earn a fair wage if they do. Being paid a fair wage for a fair day’s work is not a privilege, but a fundamental right for every worker. It’s not negotiable, and shouldn’t be subject to risk. This is not an opinion; it’s a fact under Australian law. 

Should businesses be supported by governments and society at large to succeed? Absolutely. But is there ever an excuse to deny employees their legal rights? Absolutely not. When we, as an industry, acknowledge this, only then will we rid ourselves of the great shame of wage theft. 

Practical Advice

For Hospitality Workers:

1. Know Your Award

Most hospo workers, unfortunately, have no idea what they’re actually entitled to, so it pays (literally) to educate yourself. The award you’re covered under, and what level you’re on under that award, should be listed on your employment contract and your paycheque. If it’s not, that’s a big red flag. Once you know your award, you can look it up and at least then you’ll have a basis to understand what you should be getting.

2. Get It In Writing

When you start a new job, ask for a written contract that lists the award your role is covered by. It’s your legal right, and if you don’t get one, it may be a dodgy job. Also make sure you’re getting a payslip and that your actual, accurate hours of work are being recorded - if the hours listed on your paycheque don’t match the hours on your timesheet, that’s a BIG red flag. Keep your own records if you have to by writing down your hours of work, taking pictures of your roster, etc. Employers who are happy to provide you with written records of hours and pay are the good ones.

3. Use Fair Work's Online Tools

They’re not perfect, but they’re getting better. If English is not your preferred language, you can find help in other languages here. If you find Fair Work’s tools difficult to use or confusing, leave feedback to help make them better for others. You can also register for an account on FWO’s website to keep information about yourself on hand, making follow-ups and future complaints easier and quicker.

4. Join a Union

In Australia, hospitality workers who are not managers are eligible to join the United Workers Union. Union membership has many benefits, including information, legal help and the ability to bargain collectively for better wages and conditions. The more workers who are union members, the more power the union has. Unions are far from perfect organisations, but don’t let that stop you - being a member holds very little risk and you can help make them better once you’re in. Remember, it’s also illegal for employers to punish you in any way for joining a union or for talking to your workmates about doing the same.

5. Talk to HR or Accounts

If you work for a company that has an HR or accounts person, ask to speak with them to clarify your pay and entitlements. They should be able to explain to you exactly how your contract works and the award that you’re covered under. Be polite and respectful, and ask for everything in writing. 

6. Make a Complaint

If you believe you're being underpaid or have been in the past, and you can’t reach a satisfactory outcome by dealing with your managers, you can make a complaint to the Fair Work Ombudsman. You can do this online if you sign up for an account, or give them a call on 13 13 94. Talk to your workmates about it, too. People are always more powerful the more they work together, and multiple complaints to Fair Work about the same employer are much more likely to get a serious response.

7. Check Your Super

Superannuation contributions have to be made by your employer every three months by law. If you’ve been at a job for more than three months and haven’t had a super contribution, ask about it. If you don’t get a sufficient answer, you may have grounds for a complaint. Remember that just because your paycheque lists super payments doesn’t mean they’re actually happening - you need to check deposits with your super fund. If you’re not sure what super fund you’re with, you can find out here. If you want to report your employer for not paying your super, you can do so on the Australian Taxation Office (ATO) website.

"It's important for all business owners to acknowledge and accept that the risks they undertake are entered into willingly"

For Hospo Businesses

1. Understand Your Obligations

The rules can be confusing, but it’s your job as an employer to understand them and stay compliant, so make sure you’re doing the right thing to avoid unnecessary risks to your business, reputation and livelihood. 

2. Use Free Resources

There are heaps of free online resources you can use to educate yourself about payroll and HR obligations and how to navigate them easily. From industry associations like the Restaurant & Catering Association training opportunities to online seminars hosted by accounting firms to government sites like FWO and ATO, to local government initiatives like Melbourne’s Business Concierge Service, there’s really no excuse not to know and understand your obligations as an employer.

3. Use Technology

Things have come a long way in recent years in terms of the technology tools you can access to make payroll and paperwork a million times easier. Payroll systems like Deputy are brilliant at keeping track of employee hours, even with complex award rates that change from shift to shift and hour to hour. They also make sure you have an easy-to-access digital record of everything to use as evidence if complaints arise, and to help track the profitability of your business over time so you can make good decisions about rostering. 

4. Get Help

Chances are you don’t do everything for your business yourself. Do the same with your payroll and HR tasks, unless you’re trained to do it yourself and have the time to do it properly. There are plenty of accounting and HR firms out there that specialise in helping small businesses. Given the liability that your business can suffer if you’re found to be underpaying staff, it’s well worth the spend, not to mention the peace of mind you’ll have that Fair Work isn’t about to come knocking. They’ll also probably help you get a better result on your taxes, and like all business expenses, the costs are tax-deductible. 

5. Keep Good Records

Unfounded accusations happen, and rumours can be just as bad as actual wrongdoing sometimes. To avoid any unnecessary pain or embarrassment, keep good records of all your interactions with staff that relate to their pay and work conditions, especially things like timesheets, payslips and superannuation contributions. And if you need to let someone go for performance reasons, make sure you document everything correctly to avoid retribution. 

6. Treat People With Respect

Treat people with respect and dignity, and maintain a safe workplace for them. As an employer, you have a duty of care to your employees to maintain a safe and supportive work environment. Harassment, bullying and discrimination are not on, either from staff or customers, so create policies that protect your team, and then enforce them diligently. You’ll find you end up with happier staff who stay longer and work harder, and happier customers who become regulars and don’t mind paying an extra couple of bucks to cover award rates on a public holiday. 

7. Stand Up to Wrongdoers

Dodgy employers hurt everyone, from workers to the economy to businesses doing the right thing. If you can, have a quiet word with people you know are sailing close to the wind and urge them to change their ways. If that doesn’t work, bring it up as a topic of concern in industry associations or neighbourhood meetings. If all else fails, poach their good staff by offering to pay them properly and show them respect. You can also make an anonymous report to the Fair Work Ombudsman.

Fred Siggins is a drinks writer based in Melbourne, Australia. He has worked in the hospitality and drinks industries for over twenty years as a bartender, educator and brand manager. As well as writing about spirits and Australian drinks culture, Fred hosts weekly tasting events at Melbourne whisky bar Whisky & Alement.

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